Originally published at: https://boingboing.net/2019/08/14/neo-chartalism.html
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governments spend money into existence and tax it out of existence, and government deficit spending is only inflationary if it’s bidding against the private sector for goods or services
That’s a really good and pithy layman’s summary, thanks. Prefaced with an equally brief review of how traditional economic theory works in this regard (basically, “governments raise taxes to spend it on projects”) most people would get it.
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Lol doctorow trashing economists one day, praising them the next.
Stay in your lane, friend.
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Yeah, we need to be careful about the dangers of “experts” whose conclusions match our general worldview.
I mean, if “trickle down economics” is bullshit (which it is), then we have to also entertain the notion that MMT might also be bullshit (even if it fits with our worldview). Or really, that the entire field of economics is bullshit (wasn’t there a recent story on boingboing about that?)
Of course, if it’s all bullshit, then we face a lot of challenges. But anyone who told you this would be easy was trying to sell you something.
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And I see you’ve also been taking the Evelyn Woodhead Long Sentence Writing Course! 
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government deficit spending is only inflationary if it’s bidding against the private sector for goods or services
This misses the folllow-on effect. Paying an unemployed person to do good works may not be inflationary, but that person using her newfound money to compete in the marketplace for goods she otherwise would not have purchased is.
Fed chair Ben Bernanke said it quite clearly (with a smirk) on 60 Minutes in 2009: “We simply use a computer to mark up the size of the account… It’s much more akin to printing money than to borrowing.”
He was (desperately I think) trying to knock down the notion that the taxpayers paid for the Wall-Street bank bailouts, so he admitted the simple fact that the Fed creates dollars at will. These guys aren’t nearly as bright as they think they are; they’re mostly just well placed and connected.
They’re playing the rest of us for chumps; it’s well past time to wake up and do something about it. (Democratic Socialism anyone?)
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Conflating two issues. If the economy is a fixed pot, then deficit spending, or taxes, or issuing new dollars, simply reallocates wealth between the government, industry and citizens. Yes, everyone can have a job, but not necessarily one that pays a living wage if the pot is too small. The tenor of the economy will change, as will the winners and losers, but its capability is fixed.
The more important questions is Productivity. Productivity improvements GROW the pot. So there is enough money to retire on. Or pay for healthcare. We must spend more time creating laws and institutions that reduce waste, have as their goal a few percent improvement in every process every year, training and so on. Otherwise, no matter what trickles down to whom, it will be insufficient to feed us all. MMT or no MMT.
“Fixed pots” and “waste” are the kinds of distractions that the billionaires extracting trillions from the 99% want us to be arguing over while we toil away on our hamster wheels chasing crumbs.
The solutions aren’t that complicated: Wealth tax, Wall-St transaction tax, high marginal income-tax rates, Medicare for all, hard limits on borrowing rates. Those policies alone would make a huge difference. We need to demand them, and to demand political leaders that will fight for them.
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